Japan’s Abe Moves to Declare Emergency, Pass Record Stimulus

(Bloomberg) -- Japanese Prime Minister Shinzo Abe moved to declare a state of emergency in seven prefectures including Tokyo and Osaka, and announced a record economic stimulus package as the country braces for a surge in coronavirus infections.

Abe said the official announcement of a month-long emergency could come as soon as Tuesday and also announced a much larger-than-expected stimulus package of 108 trillion yen ($988 billion) to support struggling households and businesses. Calls for more stringent measures to contain the deadly virus had been growing, as a recent spike in infections -- reaching a total of about 4,000 from less than 400 just a month ago -- sparked concerns Japan is headed for a crisis on the levels seen in the U.S. and several countries in Europe.

The emergency declaration, which will also cover Kanagawa, Saitama, Chiba, Hyogo and Fukuoka prefectures, hands powers to local governments to try to contain the spread of the virus that causes Covid-19, including by urging residents to stay at home.

“We are not changing Japan’s policy, but strengthening it and asking for full cooperation,” Abe told reporters at his official residence. “I want to make clear once again that even if an emergency is declared, we will not impose a lockdown as has been done overseas. It is the opinion of our experts that that isn’t necessary.”

Public transportation will continue to operate and supermarkets will remain open, Abe said, emphasizing that he wanted economic activity to continue as far as possible. Unlike countries like France -- where residents can be fined for leaving their homes -- there is no legal power to enforce limits on people’s movements.

The package of economic measures, set to be Japan’s biggest ever, surpassed the 60 trillion yen ($550 billion) recommended by Abe’s ruling party last week. Details of the package are expected to be announced Tuesday. Abe also said he plans to boost virus testing capacity to 20,000 a day as well as increase the number of hospital beds and ventilators. He pledged cash handouts of 200 million yen to small and mid-sized businesses.

Abe said on Tuesday morning the package would have 38 trillion yen in fiscal spending and wouldn’t be limited by what has been done in the past. “This will be among the biggest economic packages in the world,” with a total value of 108 trillion yen, he told a meeting of ruling party lawmakers at his official residence.

Japan was one of the first countries outside of the original epicenter in neighboring China to confirm a coronavirus infection and it has fared better than most, with the lowest tally of any Group of Seven country. But critics contend Japan hasn’t done enough testing to gain an accurate picture of the virus’s spread. Last week, the U.S. Embassy in Tokyo advised American citizens to return home, saying Japan’s low testing rate makes it hard to accurately assess the prevalence of the virus.

Voluntary Cooperation

An emergency declaration enables local officials to take measures such as ordering the cancellation of events, restricting use of facilities such as schools and movie theaters and appropriating land or buildings for temporary medical facilities. The announcement comes after pressure from the public and the medical community.

After last week saying the situation didn’t yet call for such a move, Abe changed course as cases in Tokyo surged over the weekend.

As with many laws in Japan, there are no penalties associated with breaching instructions, except in the case of concealing supplies after the government orders them to be handed over. Even so, businesses are likely to further cooperate in closing shops and restaurants, while more residents are expected to stay indoors.

A state of emergency can stay in place for as long as two years and be extended by as much as one more year, under a law updated in March. The prime minister can make the call when the spread of the infection threatens serious damage to the lives and health of the people, as well as to the economy.

The Tokyo metropolitan area is the world’s most populous, according to United Nations data. The region accounts for about one-third of the country’s gross domestic product, which would make it the world’s 11th largest economy on its own, about the same size as Russia’s. Osaka prefecture, near the ancient capital of Kyoto and home to electronics makers Panasonic Corp. and Sharp Corp., has a population of about 8.8 million, among the top 3 most populated in the country.

The measures come as countries across Asia reinforce their defenses against virus. While the infection rate in some nations, including China, had been falling, the virus’s global spread has triggered a new uptick in cases brought in by travelers and citizens returning from abroad.

Hong Kong, Singapore and Taiwan all recently saw record numbers of new cases. China banned foreigners from entering the country amid a rise in so-called imported cases.

Tokyo Governor Yuriko Koike has already called repeatedly on the capital’s residents to refrain from going out unnecessarily and inadvertently spreading the virus. Even so, the number of confirmed cases in Tokyo surged from about 40 in early March to more than 1,000 in just over a month.

Koike, speaking after Abe’s announcement Monday, stressed the importance ofresidents practicing social distancing to contain the virus. She said the emergency declaration will enable Tokyo to work more closely with the central government and surrounding prefectures.

While Japan has so far experienced a less severe spread of Covid-19 than many other countries, experts fear the number of infections could shoot up at any time. Abe and other officials have repeatedly expressed reluctance to declare an emergency because of the restrictions on individual rights.